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Behind Halliburton’s Estimates for 2Q17 and Beyond

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Jul. 12 2017, Updated 9:08 a.m. ET

Halliburton’s estimates of the energy market

According to Halliburton’s (HAL) management, the North American upstream energy market is expanding rapidly, while upstream activity in the rest of the world could decline due to the current cyclical headwinds.

In HAL’s 1Q17 conference call, CEO (chief executive officer) Jeffrey Allen Miller stated: “I love the way the market is shaping up. I’m excited because customers are investing to meet production targets; pricing is moving; supply versus demand dynamics are tight; our reactivated equipment is going to work at leading-edge pricing, and we are working to manage our input costs.”

Halliburton’s 2Q17 outlook inclues the following:

  • reactivation of rigs and other equipment in 2Q17
  • adding reactivated equipment at the best possible prices to stabilize market share
  • higher input costs, reactivation costs, and a seasonal decline in the Gulf of Mexico
  • incremental margin growth expectation in North America
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HAL’s management on reactivation

In HAL’s 1Q17 earnings call, Jeffrey Allen Miller stated: “The cost and benefits of our reactivation program continue as we march into the second quarter. And to be crystal clear, we’re adding reactivated equipment at market-leading prices to stabilize market share. At the same time, we’re repairing margins in the rest of the portfolio.”

Notably, HAL makes up 9.7% of the iShares US Oil Equipment & Services (IEZ). Since March 31, 2017, IEZ has fallen 21%, compared with the 14% decline in HAL’s stock price. Halliburton also makes up 0.18% of the iShares Russell 3000 ETF (IWV), while the energy sector makes up 6.1%.

You can read more about Halliburton in Market Realist’s Will Halliburton’s Fundamentals Improve in 2Q17? Continue to the next part of this series for a look at Halliburton’s revenue and earnings.

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